Annual Report and Accounts

Transcription

1 Annual Report and Accounts BPDTS Ltd - Company registered number: ISBN ( ) 1

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3 BPDTS Ltd - AR&A Contents Section Item Page Number 1 The Chair s Foreword 5 2 Background 6 3 Strategic Report 7 4 Directors report 8 5 Governance statement 11 6 Statement of Directors and Accounting Officer s responsibilities in respect of financial statements 15 7 Remuneration and staff report 16 8 Independent auditor s report to the Members of BPDTS Ltd 23 9 Financial statements 25 Notes on Accounts 1. Statement of accounting policies Staff & contractors costs Auditors remuneration 4. Taxation 5. Property, plant and equipment Intangible assets 7. Trade and other receivables Cash 9. Trade and other payables 10. Long-term loan 11. Fair deal provision Going concern basis Financial instruments 14. Contingent liabilities Related party transactions 16. Events after the reporting period 17. Losses and special payments 3

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5 1. The Chair s foreword This is the first report and accounts for BPDTS Ltd, a company set up in 2016 by the Department for Work and Pensions (DWP) to provide application development, maintenance and support services to the DWP by taking in staff and services previously held under contract with Hewlett Packard Enterprises (HPe). As a result, the DWP plans to improve Digital services, reduce costs and secure more control over its digital future. The Board is pleased to report that over 380 staff were successfully transferred into BPDTS within this reporting period, this took place in two tranches in December 2016 and in March The Board is proud that the transfers took place without disrupting the delivery of benefits and services to DWP s end customers and users. Our staff have adapted to the changes, whilst continuing to deliver high quality and often niche technical skills that kept the DWP s critical Digital services running. In a relatively short period of time, BPDTS staff were working with the DWP s Digital colleagues and have successfully and seamlessly delivered a number of new and technically challenging releases without issue, and carried out a number of fixes and maintenance works to support the smooth running of the DWP s Digital services. It is of great credit to our managers and staff that they have brought to bear their essential specialist skills and experience, and continued to provide high quality collaborative digital services to support the strategic aims of the DWP. Most importantly they have sustained and improved the systems that provide support to the lives and needs of millions of our citizens. Although this report only covers the short period of time from the start of trading on the 1 December 2016 to the end of the financial year, we look forward to being able to report on further successes in the future as BPDTS Ltd develops. Claire Johnston BPDTS Chair *Please note that since the transfer of Hewlett Packard Enterprises (HPe) staff, the Company has completed a merger to become DXE Technology. 5

6 2. Background For a number of years there has been growing concern within government over the ability to attract and retain specialist digital staff and to gain better management control of the design, development and running of digital services, underpinning many core services and processes. To better manage and improve this position, Her Majesty s Revenue and Customs (HMRC) established a new government company (a GovCo) which would provide information technology services. The DWP followed this model, drawing on HMRC s experience. Following the approval of HM Treasury and Cabinet Office, BPDTS Ltd was incorporated at Companies House on 24 August 2016 as a private company limited by guarantee with the Secretary of State for Work and Pensions as the sole member. BPDTS Ltd was set-up to supply the DWP with digital services, initially focussed on services previously supplied by HPe under commercial contract. The DWP is BPDTS sole customer. A Master Services Agreement sets out the basis on which BPDTS provides services to the Department and a Framework Agreement sets out how BPDTS should operate as an arm s length body in the public sector. Under these agreements, the Company is required to recover its costs in full through charges to the DWP. The DWP also made working capital available to BPDTS, under a Funding Facility Agreement, in the form of repayable cash funding. Under a Support Services Agreement the DWP provides some services to BPDTS, such as accommodation, for which it charges. Under the Transfer of Undertakings (Protection of Employment) (TUPE) regulations 2006, the BPDTS staff transferred to the Company from HPe in five separate waves. The first two waves comprising twenty-eight (28) employees transferred on 1 December 2016 and a further three waves comprising three-hundred and fifty-six (356) on 25 March On joining BPDTS, the staff became public servants, not civil servants. In addition contractor resources were either transferred from HPe or recruited to fill vacancies, most of the staff and contractors are based in Newcastle or Blackpool. The transfer of these essential specialist skills and services to BPDTS enables the Company to provide a dedicated collaborative service to the DWP Digital Group, where BPDTS will design, build and maintain digital, data and technology solutions that support the DWP s strategic aims and objectives and most importantly support the lives and needs of millions of our citizens. In addition to the transfer of technically skilled digital staff, BPDTS has ensured that its staff have had access to the necessary tools and working environment to enable them to bring their skills to bear. BPDTS has entered into some significant support contracts for staff payroll and accounting with Liberata. The Company has also engaged a commercial pension and life cover provider (Friends Life/ Aviva) for BPDTS staff. To support the Board, the Company appointed Ashford s to act as the Company Secretary. 6

7 3. Strategic report The strategic objectives of the Company, set out in the articles of association are to deliver information technology and related security services required to support the Department in fulfilling its mission and objectives and carrying out its statutory functions and other responsibilities, in accordance with the DWP s priorities and in compliance with its governance arrangements. The performance priority during the period covered by this report was to successfully transfer staff and services from HPe, minimising the risk of disruption to live services. This was the principal risk and uncertainty faced by the Company during this reporting period. For this reason, the Company decided not to change structures and processes during the transfer but to bring them across, as they had operated in HPe, with the intention of reviewing them subsequently in order to maximise efficiency and effectiveness. The transfers were carried out in a series of waves, starting with a relatively limited number but wide range of application development services and building on that experience. In the event, the transfers took place across five waves with the majority of staff transferring close to the end of the business year. BPDTS Ltd began trading on 1 December 2016 when the first two stages of transfers of staff took place. The remaining waves and functions transferred from HPe to BPDTS on 25 March 2017, including maintenance and support for several critical applications. The transfers from HPe to BPDTS were achieved with no material adverse consequences. By the end of the reporting period BPDTS was responsible for development and maintenance services for several critical IT services for the DWP. The costs set out in this annual report relate only to operating BPDTS and the assets owned and used by BPDTS to deliver its services. The operating costs therefore only relate to 4 months for some services, with just a week, after the arrival of the majority of staff, when more BPDTS services were delivered. Ray Long Chief Executive and Accounting Officer 7 th December

8 4. Directors report The Directors of the Company from 1 April 2016 to 31 march 2017 were: Name Role/ Position Date appointed and term Claire Johnston Ray Long (Chair of the Board & Non-Executive Director) (Chief Executive & Accounting Officer) from 24 August 2016 for 3 years from 24 August 2016 to 31 December 2017 Debbie Alder Non-Executive Director from 21 November 2016 for 3 years Paul Greening (Chief Finance Officer) from 21 November 2016 until 30 June 2018 Helen John Non-Executive Director from 21 November 2016 for 3 years Mayank Prakash Non-Executive Director from 21 November 2016 for 3 years Peter Schofield Non-Executive Director from 21 November 2016 for 3 years Note: The Chair and Chief Executive were appointed as Directors when the Company was incorporated. The CEO will retire on 31 December 2017, the CFO appointment has been agreed to 30 June 2018 to provide flexibility within the Executive Team. The Directors present their first annual report on the affairs of the Company, together with the financial statements and auditor s report for the year ended 31 March The financial statements have been prepared in accordance with the Companies Act 2006 and, as appropriate, the Government Financial Reporting Manual (FReM) and other guidance issued by HM Treasury and the Secretary of State for Work and Pensions where the disclosure requirements of these go beyond the requirements of the Companies Act In accordance with the International Financial Reporting Standards as adopted by the EU (Adopted IFRSs) and International Financial Reporting Interpretations Committee Interpretations, the financial statements have been prepared and approved by the Directors. The Governance statement and the Remuneration and staff report following this section form part of this report. Principal activities BPDTS Ltd is a private company as defined by the Companies Act 2006, limited by guarantee, with the reference number The Company was incorporated on 24 August 2016, with the principal objective to deliver the information technology and security services to DWP. The BPDTS services are required to support the DWP s mission and objectives and its statutory functions and other responsibilities, in accordance with the DWP s priorities and in compliance with its governance arrangements. Going concern basis During the reporting period, the Company s expenditure was 12.1m, matched by income of 12.1m from the DWP. Expenditure and income match because the Company is required, under agreements with the DWP, to operate on a full cost recovery basis, without making a profit. As at 31 March 2017 the Company had assets less current liabilities of 5m, mainly in the form of income due from the DWP. 8

9 BPDTS Ltd is reliant on income from the DWP, its sole customer. Under the Master Services Agreement between BPDTS Ltd and the DWP, the DWP can terminate the agreement with six months notice. In accordance with their responsibilities, the Directors have considered the appropriateness of the going concern basis for the preparation of the financial statements. They have been provided with assurance from the DWP s Permanent Secretary regarding demand and current and future funding for BPDTS Ltd. These assurances provide the Directors with reasonable expectation that: Demand and therefore funding will increase in ; The DWP will provide sufficient notice if there were anticipated changes in demand; and To address concerns about funding shortfalls, the DWP will work with the Company to ensure that it always has sufficient cash to meet its liabilities. Therefore after consideration of the assurances provided by the DWP s Permanent Secretary and feedback from HM Treasury s review of progress, the Directors are satisfied that BPDTS Ltd is a going concern. Dividends BPDTS Ltd is a private company limited by guarantee, it has no share capital and therefore does not pay dividends. Information security The Directors recognise their responsibilities under the Data Protection Act to ensure that personal and commercial information is protected against internal and external threats, loss or misuse. The nature of the services provided by BPDTS makes information security a particularly important priority for the Company. To minimise risks during set up, the transfers of staff and services from HPe to BPDTS involved minimal changes in processes and controls. Subsequent changes are reviewed on an ongoing basis to ensure they comply with the DWP Security standards. Personal data related incidents There were no personal data related incidents in 2016/17 reported to the Information Commissioner. Environmental matters The Company operates out of the DWP locations and supports the DWP s strategies in relation to sustainability. Health and safety In the year 2016/17 we reported no accidents under Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 2013 (RIDDOR) to the Health and Safety Executive (HSE). 9

10 Auditor The Comptroller and Auditor General (C&AG) is an Officer of the House of Commons and leads the National Audit Office (NAO). The C&AG certifies the accounts of all Government Departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether Departments and the bodies they fund have used their resources efficiently, effectively, and with economy. The C&AG is appointed as the BPDTS External Auditor, with the audit programme being undertaken by or under the supervision of the NAO. The NAO is independent of government and their purpose is to scrutinise public spending for Parliament. Internal audit is provided by the Government Internal Audit Agency (GIAA) who will review policy and practice, process, compliance, administration, communication and training, quality, assurance and improvements. The internal audit programme is designed to evaluate conformance with the Public Sector Internal Audit Standards (PSIAS). Each of the Directors at the date of approval of this report confirms that: So far as the Director is aware, there is no relevant information of which the Company s auditor is unaware; and The Director has taken all the steps that he/she ought to have taken as a director to make himself/herself aware of any relevant information and to establish that the Company s auditor is aware of that information. This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act Approved by the Board and signed on its behalf by: Ray Long Chief Executive and Accounting Officer 7 th December

11 5. Governance statement BPDTS Ltd was set up as a company limited by guarantee. The Secretary of State for Work and Pensions is the sole member of the Company. BPDTS is an arm s length body of the DWP, with the Chief Executive Officer appointed as Accounting Officer with delegated accountabilities and responsibilities from the DWP Principal Accounting Officer. The CEO is also the Consolidation Officer for the purpose of Whole of Government Accounts. His Accounting Officer responsibilities are set out in the Framework Document and in HM Treasury s Managing Public Money. The Chief Executive has responsibility for day-to-day operations and has specific responsibilities for BPDTS staff. Although BPDTS is not yet formally classified by the Office of National Statistics (ONS) and the Cabinet Office, the structure and relationships of BPDTS to the DWP are set out in its Framework Agreement. The Company is committed to the principles contained in the UK Corporate Governance code issued by the Financial Reporting Council. The Board has had regard to the principles set out in code insofar as they are appropriate to the Company as an arm s length body of the DWP and given its size and how long it has existed. During the reporting year the Board of BPDTS consisted of 7 Directors, of whom 2 were Executive Directors (the CEO and CFO) and 5 were Non-Executive Directors. Of the 5 Non-Executive Directors, 4 were also members of the DWP s Executive Team and of these, 2 were also members of the DWP s Board (the Directors General for Finance and Digital). The Chair is employed by the Government Legal Department GLD), not the DWP, but is a member of the DWP Executive Team. The Board is responsible for setting company strategy, approval of major items of expenditure and the establishment and monitoring of internal controls. It reviews the strategic direction of the company and monitors the progress of the Company towards the achievement of its budgets and plans. The Board met 6 times during the reporting period. It also took steps to set up a Remuneration Committee and an Audit and Risk Committee. The Remuneration Committee met once during the period, while the Audit and Risk Committee met for the first time after the end of the reporting period. Board Member Number of attendances at meetings of the Board Number of attendances at the Remuneration committee Claire Johnston (Chair & Non-Executive Director) 5/6 * N/A Ray Long (Chief Executive & Accounting Officer) 6/6 * 1/1 Debbie Alder (Non-Executive Director) 4/4 ** 1/1 Paul Greening (Chief Financial Officer) 4/4 ** 1/1 Helen John (Non-Executive Director) 4/4 ** N/A Mayank Prakash (Non-Executive Director 4/4 ** 1/1 Peter Schofield (Non-Executive Director) 4/4 ** N/A Please note: The Chair and Chief Executive * were appointed at incorporation on 24 Aug 2016 The remaining Directors ** were appointed on 21 November

12 Peter Schofield chairs the Audit and Risk Committee (ARC), with Helen John as an ARC member. The Board of Directors agreed to appoint Jim Arnott as an additional ARC member - his appointment took effect 25 September Debbie Alder chairs the Remuneration Committee (Rem Com) with Mayank Prakash as a Rem Com member. Executive Directors and the BPDTS Secretariat attend both as appropriate. The following section sets out the system of control that the Board and Accounting Officer have put in place and the assurances which they have received from the BPDTS Executive Team (see below) and from the internal audit service provided by the Government Internal Audit Agency, on how the system of control is operating. It concludes with the Accounting Officer s assessment of the effectiveness of the system of control, and sets out any control issues which the Board may judge to be significant. System of control BPDTS is principally governed by: Company law and the Articles of Association; The Framework Agreement, Master Services Agreement, Support Services; Agreement and Funding Facility Agreement between the DWP and BPDTS; The Accounting Officer s responsibility to the Principal Accounting Officer for the Company s expenditure and management; and The BPDTS Board s collective responsibility for advice on strategic and operational issues, and for scrutinising and challenging policies and performance. The system of control includes the Board sub-committees and work undertaken by the BPDTS Executive Team, along with the control framework which is supported by internal and external audit assurance processes. The control framework is intended to provide appropriate and proportionate safeguards, taking into account the accountabilities of the Company, its relationship with the DWP Digital Group and its place within the DWP family. The key elements of the control framework are: Business: Processes and controls for agreeing services and deliverables with the DWP, dealing with incidents and measuring performance. The key risk here was of disruption in service in the transition from HPe and this was mitigated by retaining HPe processes and putting in place a wide range of reviews and checkpoints by BPDTS and the DWP programme. People: Processes and controls for joiners and leavers, line management, performance management, pay and allowances. A key risk here during the reporting period was that the transfers of staff into the Company did not ensure appropriate application of TUPE provisions. This was mitigated by extensive collaboration between the Company and the DWP programme. Finance: Processes and controls for accounts payable and receivable, financial reporting, budgetary management and procurement. A key risk here was that appropriate financial controls were not built into BPDTS processes from the beginning. This was mitigated by contracting with Liberata to perform a number of standard transactional processes for the Company and the adoption of the DWP controls as a default. 12

13 Information security. As a critical subset of business processes and controls, BPDTS has kept in place the processes and controls operated by HPe to safeguard data and made changes only in consultation with security experts in the DWP. The Company s systems and controls were in the course of development in the period covered by this report. Many of those in operation while the services were provided by HPe were continued after the transfer. Others, such as those relating to the financial systems and controls of the Company itself, needed to be developed afresh. Progress has been made on these and they continue to develop. The Executive team As Chief Executive and Accounting Officer, I am responsible for maintaining a robust system of internal control that helps us achieve our policies, aims and objectives, while safeguarding public funds and our assets. With my executive team, I run and manage the Company, and ensure it is delivering services to the satisfaction of the DWP Digital Group. The executive team members have appropriate delegated management and risk management authority. They escalate risks which they cannot mitigate themselves or which may affect other business areas to executive team meetings, so as to reach a collective decision. BPDTS Executive Team Role/ Position Ray Long Chief Executive Officer and Accounting Officer Paul Greening Chief Finance Officer Jess Townsley HR Business Partner Roland Knell Head of Corporate Governance Paul Doughty * Operations Change Andy Lucas Operations Run Raymond Cathline ET Support Team Leader Julian Balaam Communications Richard McHugh from 4 September 2017 * Assurance about the operation of the system of control The bulk of services and staff only transferred from HPe at the very end of the reporting period, so appropriate systems for providing assurance on the operation of the system of control were still developing. For business processes, management relied on the controls and feedback mechanisms already put in place by HPe. For HR and finance processes, key assurances were derived by the executive team from management information provided by Liberata as well as through the line management chain. One of the roles of the Audit and Risk Committee is to form a view on the robustness of the design and operation of the system of control. The Committee met for the first time after the end of the reporting period, but has taken assurance from the conclusions of internal audit reviews on the Company s financial systems, its charging processes and its governance. It has also taken assurance by making enquiries of management in relation to subjects such as financial controls, whistleblowing and fraud. 13

14 Assurance opinion of the Head of Internal Audit The Head of Internal Audit, Robert Evans provides independent assurance to our CEO and the Board (via the Audit and Risk Committee - ARC). This includes audit and advisory engagements, which help us improve our risk management, control and governance. Based on the findings and recommendations from a small number of reviews to date, and therefore internal audit s limited knowledge and experience of the Company s operations, in their opinion, the governance, risk management and control arrangements during the reporting period have provided reasonable assurance at this point of BPDTS s development. This is defined by a review of Governance which confirmed that the Company has been incorporated as a company limited by guarantee in line with the requirements of the Act and a review of financial reporting has also confirmed that many of the fundamental financial controls are in place, or are planned for introduction. Ray Long Chief Executive and Accounting Officer 7 th December

15 6. Statement of Directors and Accounting Officer s responsibilities in respect of financial statements The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law the directors are required to prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU). Under company law the Directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss for that period. In preparing these financial statements, International Accounting Standard 1 requires that Directors: Properly select and apply accounting policies; Present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; Provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity s financial position and financial performance; and Make an assessment of the Company s ability to continue as a going concern. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company s transactions and disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act Directors are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The control environment of the Company is still developing, but there were no significant control issues during the reporting period. BPDTS has adopted and intends to adopt the DWP policies where appropriate, for example, in relation to whistleblowing and fraud. This report has been approved by the Board of Directors and is signed off by the Accounting Officer, who is also a Director, on behalf of the Board of Directors. The Principal Accounting Officer for Work and Pensions has designated me, a Director and Chief Executive Officer, as Accounting Officer for BPDTS Ltd. The responsibilities of an Accounting Officer, including responsibility for the propriety and regularity of the public finances for which the Accounting Officer is answerable, for keeping proper records and for safeguarding the Company s assets, are set out in Managing Public Money, published by HM Treasury. Ray Long Chief Executive and Accounting Officer 7 th December

16 7. Remuneration and staff report Our people The BPDTS staff transferred to the Company from HPe in five separate waves. The first two waves comprising twenty-eight (28) employees transferred on 1 December 2016 and a further three waves comprising three-hundred and fifty-six (356) on 25 March On joining BPDTS, the staff became public servants, not civil servants. Most of the staff are based in Newcastle or Blackpool. They transferred on their existing terms and conditions under the TUPE (Transfer of Undertakings (Protection of Employment)) regulations. As a result, BPDTS staff are on a range of different terms of conditions, depending on those that applied to each of them at the date of transfer. In addition BPDTS engaged off payroll personnel and staff seconded from the DWP. BPDTS has processes in place to ensure that tax and national insurance are correctly calculated. The BPDTS Board has set up a Remuneration Committee to plan the pay strategy for the Company. The BPDTS pay strategy will be implemented within an annual pay remit, signed off by the Accounting Officer, approved by the Secretary of State and submitted to the Treasury. Remuneration of Directors The Board comprises seven (7) Directors, appointed by the Secretary of State for Work and Pensions. All the Directors are senior civil servants whose remuneration, like that of other senior civil servants, is set by the Prime Minister following independent advice from the Senior Salaries Review Body. Details are available on None of the Directors received additional remuneration for their work as director of BPDTS Ltd. The Non-Executive Directors undertake their roles for BPDTS in addition to their other responsibilities. Their remuneration was not paid for by BPDTS, nor was their remuneration recharged to BPDTS by the organisation that employs them. The BPDTS Non-Executive Directors except for the Chair, Claire Johnston, are salaried and employed Senior Civil Servants for the DWP. Claire Johnston is a salaried member of the Senior Civil Service employed by the Government Legal Department (GLD). The Executive Directors, Ray Long (CEO) and Paul Greening (CFO), are civil servants who are employed by the DWP. From 1 December 2016, all of Paul Greening s salary and 75% of Ray Long s salary was recharged by the DWP to BPDTS. Salary recharges are based on the proportion of time spent by directors, in their BPDTS roles, subject to a de minimis limit. The dates of appointment and contract lengths of the Directors are given in the Directors Report above. 16

17 Executive Directors pay This information has been subject to audit Directors' remuneration Name Ray Long * Chief Executive (appointed 24 Aug 2016) Paul Greening Finance Director (appointed 21 Nov 2016 for one year) Salary ' ( full year equivalent) (80-85 full year equivalent) Pension Benefits '000 Total Remuneration ' The salaries stated above are solely for the period in the year when an individual served as Directors for BPDTS Ltd. No bonus payments were made to the Executive Directors. *The figures in the table for the Chief Executive relate to his full remuneration. Only 75% of this was recharged to BPTDS as he retained some DWP responsibilities Salaries include: gross salary reserved rights to London weighting or London allowances any other allowances and contracted expenses to the extent that they are subject to UK taxation Executive Directors pensions This information has been subject to audit Directors' pensions Name Real increase in pension and related lump sum at pension age Accrued pension at pension age as at 31 March 2017 and related lump sum CETV at date of Directors appointment CETV at 31 March 2017 Real increase in CETV (cash equivalent transfer value) '000 '000 '000 '000 '000 Ray Long Chief Executive (appointed 24 August 2016) plus a lump sum of plus a lump sum of Paul Greening Finance Director (appointed 21 November 2016) plus a lump sum of plus a lump sum of

18 Non-executive directors remuneration and pension arrangements Name Employing organisation that pays their salary Pension arrangements Claire Johnston Government Legal Department As part of their employment Mayank Prakash Department for Work and Pensions As part of their employment Peter Schofield Department for Work and Pensions As part of their employment Debbie Alder Department for Work and Pensions As part of their employment Helen John Department for Work and Pensions As part of their employment Remuneration of employees BPDTS has adopted the transferred staff remuneration environment from HPe as the workable and understood starting point. BPDTS is developing a job architecture and remuneration policy appropriate for its objectives and the labour market in which it operates. Remuneration of employees is set by the Board on the advice of the Remuneration Committee. Fair pay disclosure This information has been subject to audit Reporting bodies are required to disclose the relationship between the remuneration of the highest paid Director in their organisation and the median remuneration of the organisation s workforce. The pay band of our highest-paid Director during was k (FTE). This was 3.52 times the median pay of the workforce, which was 30,540 (FTE). Pay band of highest paid executive Director Median total pay Ratio 105, ,000 30, :1 In no employee was paid more than the highest-paid director. Pay bands ranged from [ 13,500-14,000] to [ 105, ,000]. Total pay includes salary, non-consolidated performance-related pay and benefits in kind. It does not include severance payments, employer pension contributions and the cash equivalent transfer value of pensions. 18

19 Staff costs Staff costs during the four months of economic activity ending 31 March 2017 were as follows: Item Permanent Staff 000 Other 000 Total 000 Wages and salaries Contractors 1,902 1,902 Social security costs Other pension costs Directors' salary recharges Fair Deal costs 7,440 7,440 Total staff costs 8,528 1,902 10,430 The Fair Deal costs represent the estimated costs to cover a probable pension deficit for those staff that have the option to transfer their accrued benefits from the EDS 1994 Scheme to the CSPA (Civil Service Pension Arrangements) (see note 11). Other staff costs represent the cost to the Company of contractors. Pension costs The Company makes contributions to its own BPDTS workplace pension scheme. For 2016/17, employer contributions of 39,209 were payable to the BPDTS workplace pension scheme. Employer contributions payable to the CSPA under the 2013 New Fair Deal policy for were 18,207. Civil Service and Other Compensation Schemes - Exit Packages There were no civil service and other compensation schemes exit packages agreed by the Company during the four month reporting period ended 31 March Pension schemes Friends Life pension scheme Most BPDTS employees are members of a defined contribution workplace pension scheme, set up by BPDTS and operated by Friends Life under a Master Trust. BPDTS meets its obligations under automatic enrolment legislation and provides a generous employer contribution for employees joining the Friends Life scheme. 19

20 Under the Friends Life scheme, employee and employer contributions as a percentage of salary are as follows: Employee contribution Employer contribution 3% 6% 4% 8% 5% 10% Over 5% 10% Civil Service Pension Schemes Some employees of BPDTS and all civil servants seconded to BPDTS are members of the Civil Service pension schemes. From 1 April 2015 a new pension scheme for civil servants was introduced the Civil Servants and Others Pension Scheme or alpha, which provides benefits on a career average basis with a normal pension age equal to the member s State Pension Age (or 65 if higher). From that date all newly appointed civil servants and the majority of those already in service joined alpha. Prior to that date, civil servants participated in the Principal Civil Service Pension Scheme (PCSPS). The PCSPS has four sections: 3 providing benefits on a final salary basis (classic, premium or classic plus) with a normal pension age of 60; and one providing benefits on a whole career basis (nuvos) with a normal pension age of 65. These statutory arrangements are unfunded with the cost of benefits met by monies voted by Parliament each year. Pensions payable under classic, premium, classic plus, nuvos and alpha are increased annually in line with Pensions Increase legislation. Existing members of the PCSPS who were within 10 years of their normal pension age on 1 April 2012 remained in the PCSPS after 1 April Those who were between 10 years and 13 years and 5 months from their normal pension age on 1 April 2012 will switch into alpha sometime between 1 June 2015 and 1 February All members who switch to alpha have their PCSPS benefits banked, with those with earlier benefits in one of the final salary sections of the PCSPS having those benefits based on their final salary when they leave alpha. (The pension figures quoted for officials show pension earned in PCSPS or alpha as appropriate. Where the official has benefits in both the PCSPS and alpha the figure quoted is the combined value of their benefits in the two schemes). Members joining from October 2002 may opt for either the appropriate defined benefit arrangement or a money purchase stakeholder pension with an employer contribution (partnership pension account). Employee contributions are salary-related and range between 3.8% and 8.05% of pensionable earnings for members of classic (and members of alpha who were members of classic immediately before joining alpha) and between 4.6% and 8.05% for members of premium, classic plus, nuvos and all other members of alpha. 20

21 Benefits in classic accrue at the rate of 1/80th of final pensionable earnings for each year of service. In addition, a lump sum equivalent to three years initial pension is payable on retirement. For premium, benefits accrue at the rate of 1/60th of final pensionable earnings for each year of service. Unlike classic, there is no automatic lump sum. Classic plus is essentially a hybrid with benefits for service before 1 October 2002 calculated broadly as per classic and benefits for service from October 2002 worked out as in premium. In nuvos a member builds up a pension based on his or her pensionable earnings during their period of scheme membership. At the end of the scheme year (31 March) the member s earned pension account is credited with 2.3% of their pensionable earnings in that scheme year and the accrued pension is uprated in line with Pensions Increase legislation. Benefits in alpha build up in a similar way to nuvos, except that the accrual rate is 2.32%. In all cases members may opt to give up (commute) pension for a lump sum up to the limits set by the Finance Act The partnership pension account is a stakeholder pension arrangement. The employer makes a basic contribution of between 8% and 14.75% (depending on the age of the member) into a stakeholder pension product chosen by the employee from a panel of providers. The employee does not have to contribute, but where they do make contributions, the employer will match these up to a limit of 3% of pensionable salary (in addition to the employer s basic contribution). Employers also contribute a further 0.5% of pensionable salary to cover the cost of centrally-provided risk benefit cover (death in service and ill health retirement). Staff data Average number of people employed Our data is based on twenty-eight (28 FTE) staff from December 2016 to 31 March 2017 and three-hundred and fifty-six (356 FTE) staff for the last week of March This information has been subject to audit The average number of people employed and engaged during the four months of economic activity was as follows: Item Employees Engaged Total Average number of people employed and engaged Staff composition and policies The staff composition of the Company and its staff policies reflected the position at the point of transfer from HPe. These will develop as BPDTS matures as an organisation. 21

22 Off-payroll engagements As at 31 March 2017 BPDTS had no off-payroll engagements that were paid more than 220 per day and that had lasted more than 6 months at that date, as the Company had not been in operation for 6 months. For the same reason BPDTS did not enter into any new off-payroll engagements during the reporting period that were paid more than 200 per day that had lasted more than 6 months by the end of the reporting period. BPDTS relies on a significant number of off-payroll staff and third party services in order to meet the varying demand for services required by the DWP Digital Group. As at 31 March 2017 BPDTS had one hundred and twenty-three (123) off-payroll engagements. Most of the contractors involved had transferred from engagements with HPe. The bulk of transfers of contractors took place shortly before the introduction of changes to the tax treatment of off-payroll staff. BPDTS carried out the necessary assessments of its off-payroll staff for tax and national insurance and ensured the arrangements were compliant within the required timescales. Sickness data Our data is based on twenty-eight (28 FTE) staff from December 2016 to 31 March 2017 and three-hundred and fifty-six (356 FTE) staff for the last week of March Although the sickness levels over the reporting period were relatively low, we have also inherited through the March transfer a number of long-term sick staff from HPe. For the period below our data on sickness shows the following: Working days Days lost to sickness Average Working Days Lost (annual equivalent) Days available to 31 March This is based on 28 FTE Dec to March and 356 FTE for 5 working days in March 2017 Diversity and inclusion BPDTS is committed as an employer to promoting diversity and inclusion. As the workforce composition and its terms and conditions were the product of the transfers to the Company under TUPE, the priority for BPDTS during the reporting period was ensuring that the staff transfers were carried out as efficiently and effectively as possible with minimal risk to the existing contractual position of staff. BPDTS is proud to have attained a level 2 accreditation for Disability Confident, a scheme designed to help organisations to recruit and retain disabled people and people with health conditions, to benefit both the individual and the employer. 22

23 8. Independent auditor s report to the Members of BPDTS Ltd I have audited the financial statements of BPDTS Ltd for the year ended 31 March 2017 which comprise the statement of financial position, statement of comprehensive income, statement of cash flows, statement of changes in equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and the International Financial Reporting Standards as adopted by the European Union. Respective responsibilities of the Directors and the auditor As explained more fully in the Statement of Directors and Accounting Officer s responsibilities, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. My responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require me and my staff to comply with the Auditing Practices Board s Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition I read all the financial and non-financial information in the Chair s Forward, Background, Strategic Report and Directors Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by me in the course of performing the audit. If I become aware of any apparent material misstatements or inconsistencies I consider the implications for my report. I am required to obtain evidence sufficient to give reasonable assurance that the expenditure and income recorded in the financial statements have been applied to the purposes intended by Parliament and the financial transactions recorded in the financial statements conform to the authorities which govern them. Opinion on financial statements In my opinion: The financial statements give a true and fair view of the state of the Company s affairs as at 31 March 2017 and of the net operating income for the year then ended; The financial statements have been properly prepared in accordance with International Financial Reporting Standards as adopted by European Union; and The financial statements have been prepared in accordance with the Companies Act

24 Opinion on regularity In my opinion, in all material respects the expenditure and income recorded in the financial statements have been applied to the purposes intended by Parliament and the financial transactions recorded in the financial statements conform to the authorities which govern them. Opinion on other matters prescribed by the Companies Act 2006 In my opinion: The part of the Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; The information given in the Strategic and Directors Report for the financial year for which the financial statements are prepared is consistent with the financial statements and these reports have been prepared in accordance with the applicable legal requirements; and In light of the knowledge and understanding of the group and the Company and its environment obtained in the course of the audit, I have not identified any material misstatements in the Strategic Report or the Directors Report. Matters on which I report by exception I have nothing to report in respect of the following matters where the Companies Act 2006 requires me to report to you if, in my opinion: Adequate accounting records have not been kept, or returns adequate for my audit have not been received from branches not visited by my staff; or The financial statements are not in agreement with the accounting records and returns; or Certain disclosures of directors remuneration specified by law are not made; or I have not received all of the information and explanations I require for my audit. Peter Morland (Senior Statutory Auditor) 11 December 2017 For and on behalf of the Comptroller and Auditor General National Audit Office Buckingham Palace Road Victoria London SW1W 9SP 24

25 9. Financial Statements Statement of Comprehensive Income for the period ended 31 March 2017 Note Period ended 31 March 's Operating income 12,112 Operating expenditure Staff costs 2 (10,430) IT support and service costs (453) Non IT support services (625) Depreciation and amortisation 5&6 (513) Other expenditure (91) Total operating expenditure (12,112) Net operating income 0 Other comprehensive income Net gain on revaluation of intangible assets 6 18 Total comprehensive income for the period ended 31 March BPDTS Ltd was incorporated on 24 August 2016 and commenced trading on 1 December These are the first set of accounts produced for the Company, reflecting the period to 31 March Further detail on the accounting period is described in note 1. The notes on pages 29 to 39 form part of these financial statements. 25

26 Statement of Financial Position as at 31 March 2017 Note 31 March 's Non-current assets Property, plant and equipment 5 1,206 Intangible assets 6 1,290 Total non-current assets 2,496 Current assets Trade and other receivables 7 12,388 Cash and cash equivalents 8 3,083 Total current assets 15,471 Total assets 17,967 Current liabilities Trade and other payables 9 (5,509) Provisions 11 (7,440) Total current liabilities (12,949) Total assets less current liabilities 5,018 Non-current liabilities DWP loan 10 (5,000) Total non-current liabilities (5,000) Total assets less total liabilities 18 Equity Revaluation Reserve 18 General Reserve 0 Total equity 18 BPDTS Ltd was incorporated on 24 August 2016 and commenced trading on 1 December These are the first set of accounts produced for the Company, reflecting the period to 31 March Further detail on the accounting period is described in note 1. As the Company is limited by guarantee, it has no share capital. The notes on pages 29 to 39 form part of these financial statements. These financial statements were approved and authorised for issue by the Board of Directors on 7th December 2017, and were signed on its behalf by: Ray Long Chief Executive & Accounting Officer 7 th December 2017 Company registered number:

27 Statement of Cash Flows for the period ended 31 March 2017 Note 31 March 's Cash flows from operating activities Net operating income 0 Adjustments for: Depreciation 5 75 Amortisation Impairments Creation of provision 11 7,440 (Increase)/decrease in trade and other receivables 7 (12,388) (Decrease)/increase in trade and other payables 9 5,509 Net cash inflow from operating activities 1,074 Cash flows from investing activities Purchase of property, plant and equipment 5 (1,281) Purchase of intangible assets 6 (1,710) Receipt of shareholder loan 10 5,000 Net cash inflow from investing activities 2,009 Cash flows from financing activities Net cash inflows from financing activities 0 Net increase/(decrease) in cash in the period 3,083 Cash at the beginning of the period 0 Cash at the end of the period 3,083 BPDTS Ltd was incorporated on 24 August 2016 and commenced trading on 1 December These are the first set of accounts produced for the Company, reflecting the period to 31 March Further detail on the accounting period is described in note 1. The notes on pages 29 to 39 form part of these financial statements. 27